Why 'Bank Transfer Day' Won't Work

More than 64,000 of Americans have signed up to participate in "Bank Transfer Day" on November 5. Most will likely fail in their mission to switch to a new bank, according to a report released Tuesday.

"Newcomers to banks appear to be running into a lot of obstacles," says Mark Schwanhausser, senior analyst for multichannel financial services with Javelin.

Many of the obstacles to opening a new account are in place for security reasons. They include steps such as verifying an applicant's identity and that the money to open the account is rightfully theirs. But these same steps also slow down an online process that is perceived to be a faster, easier way to bank.

What can be done quickly in-person at a brick-and-mortar bank can often take more than a day the online way.

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Using secret shoppers, the Javelin research looked at 10 of the biggest consumer banks in the United States as well as a select group of five "tech-savvy" institutions. The report also found that customers abandoned applications to smaller institutions at a higher rate than they did to the big banks.

With more than one-third of Americans expressing interest in changing banks, according to a recent survey from Intuit Financial Services, the poor success rate for new accounts could present problems for smaller institutions hoping to draw in new customers.

"In terms of being a visible protest it is not a great one. It takes time to see [the change] in aggregate numbers," Schwannhausser says. Last year only 7% percent of banking customers changed financial institutions, down from 11% the previous year.